The Global factors and activities by Foreign Institutional Investors (FII), will set the trend for domestic equity markets for the week, according to the analyst. However, results of Maharashtra and Jharkhand polls may have sentimental impact on stocks on Monday. The stock market witnessed a significant recovery on Friday with Nifty and Sensex touching the best single-day gains in five months and a relief after a correction week.
“On the domestic front, the outcomes of the Maharashtra and Jharkhand elections will be crucial triggers. Especially Maharashtra where NDA witnessed a one-sided victory which is likely to boost bullish sentiment further. However, global factors continue to pose significant risks. Escalating tensions between Russia and Ukraine, alongside rising crude oil prices, have added to inflationary concerns,” Santosh Meena, Head of Research, Swastika Investmart Ltd, said.
A strong US dollar index and high US bond yields are weighing on the rupee, leading to record foreign institutional investor (FII) outflows.
In assembly election results of Maharashtra and Jharkhand on Saturday, BJP won with a record number of seats to propel the party-led ruling Mahayuti alliance to a landslide victory while the INDIA bloc stormed back to power in Jharkhand on the back of a spectacular showing by the JMM.
Some other factors including Brent crude and the rupee-dollar trend would also influence the stock markets trading session. The international events such as US economic data including GDP growth rate, and Federal Open Market Committee (FOMC) meeting minutes could also shape the trend.
“Overall, the political outcomes, particularly in Maharashtra, suggest a positive outlook for the Indian stock market, especially in sectors that benefit from infrastructure development and political stability,” Palka Arora Chopra, Director, Master Capital Services Ltd, said.
While the sell-off continues, the quantum of net outflows has significantly reduced compared to October, when Foreign Portfolio Investors (FPI) withdrew Rs 94,017 crore (USD 11.2 billion) on a net basis.
With the latest pull-out, FPI outflows on a net basis are Rs 19,940 crore in 2024 so far.
Going ahead, the flows from foreign investors into the Indian equity markets would depend on the policies implemented under Donald Trump’s presidency, the prevailing inflation and interest rate dynamics, the trajectory of the geopolitical landscape, and the third-quarter earnings performance of Indian companies, Himanshu Srivastava, Associate Director – Manager Research, Morningstar Investment Research India, said.
Last week, the BSE benchmark zoomed 1,536.8 points or 1.98 per cent, and the Nifty climbed 374.55 points or 1.59 per cent. Most sectors, except energy, contributed to the rebound, with realty, auto, and FMCG leading the pack.
(With PTI Inputs)